Wednesday, March 11th, 2009 at 11:42 AM
Banks Slowing the Slowdown?
For those who are wondering about the effect of banks holding back REO properties, let’s review some of the other reasons why the downturn will continue, regardless.
1. Still no mention anywhere about neg-am recasts getting waived.
The powers-that-be may not figure this out in time, or not care enough about the California market(probably more of the former). If you thought the subprime loan payment adjusted a lot higher, wait until you see what a neg-am payment looks like after a re-cast.
2. The robot realtors aren’t helping. These listing agents now have their own websites so the buyers’ agents have to go there to download ‘special’ forms, which are usually just their version of the CYA. This week one of the websites was down, so we couldn’t submit an offer. But you can’t call them, you can only email.
Magically a few hours later the website was back up, and we got the forms – one saying you must pre-qual with their lender in order to submit an offer.
An email to the lender gets returned, undeliverable, and his voice mail is full – can’t leave a message. Here we have a viable offer to submit, yet the system is in the way. By the way, they said all offers must be submitted within 24 hours after listing too.
3. Some of the agents doing short sales are killing me. Check out short-sale listing #090013568. I called this lady because she listed this house for $299,000, which is $100,000 under three good closed comps which I was using to price a model-match Countrywide REO down the street.
She tells me that she already has an offer of $350,000, which only tanks my value by about 10% to 15%. But over the next 3-6 months, hers will be sitting there as an active listing, and buyers will think the values are $299,000, not $350,000.
The Countrywide’s appraisers will hang me out to dry around $399,000, and I’ll have my hands full trying to sell it. The price will have to drop steadily until I can convince a buyer that the other listing will close much higher, and it’ll probably still mean that my price will have to go substantially lower to compensate.
Check her listing – no photos, no remarks, even the occupant’s phone number is wrong, and I checked – she doesn’t have another listing. What is she doing??
The environment is bad enough, and how some are handling their business are making it worse.
(Sorry, rant over)
Posted on Wednesday, March 11th, 2009 at 11:42 AM in Listing Agent Practices | 31 Comments » | 
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Sounds like you’re advocating for some systemic changes to remove the obvious fraud that is advertised short sale prices, which I would totally agree with. Fortunately, I think the problem will mostly solve itself; some online RE sites are already allowing users to exclude short sales from results, and it seems like more RE agents are shying away from dealing with them due to the obvious BS of the numbers (leading to frustration on both sides and no sales). Once most RE agents refuse to deal with them and online sites are dumping them automatically, they’ll become just another example of fraud and deception which will resonate with people for years to come (along with Yun’s BS, bogus auctions, DPA scams (on taxpayers), inflated appraisals, straw buyers, and all the other numerous black eyes the industry is accumulating).
I do feel sorry for the RE agents who have to deal with the fallout, both in the interim and the long term. Hopefully this blog will generate enough continued business for you (Jim) from people who appreciate your honesty in the sea of malignancy which is the rest of the RE industry now.
Nick | March 11th, 2009 at 12:15 pmHang in there Jim. Anyone I talk to looking for a Realtor gets your name and number. I’m not a fan of the typical Realtor however and I hope all the incompentent ones cliff dive.
3clicks from da Beach | March 11th, 2009 at 1:21 pmJim,
You have every right to rant. The real estate “profession” is full of people who have absolutely no business being in it. And that includes the finance side.
No, we are not going to get out of the mess we are in until we clean house and change our ways. That is going to take some tough, mature, disciplined, principled, fair, smart and civic minded people to do it.
Do we have enough of those people left in the good old USA?
Consultant | March 11th, 2009 at 1:35 pmI feel for ya, Jim… I’ve met some pretty sketchy people in real estate and I’m sorry that you have to work with them…
greenlander | March 11th, 2009 at 2:33 pmIn Encinitas, there is a 1368 sqft zero lot line REO and last month the bank listed it above $500K. Now it is down to $485K and Zillow statess ‘accepted offer waiting signatures. Considering back-up offers at this time.’ That is $355 sq/ft.
Down the street is an 1125 sqft Short Sale listed at $430. That is $382 sq/ft
It took one year for BOTH properties to finally make there way to the market. The owner of the now short was collecting rent from the tennant even though the house was in pre foreclosure process. I can only image how much inventory is left.
3clicks from da Beach | March 11th, 2009 at 2:36 pmone saying you must pre-qual with their lender in order to submit an offer.
Hopefully they fine them more than you’ve ever been fined for your imaginary transgressions. That’s so blatantly illegal someone might consider going straight to the DA.
Rob Dawg | March 11th, 2009 at 2:39 pm“one saying you must pre-qual with their lender in order to submit an offer.”
Doesn’t your credit get dinged every time you get pre-qualed? If this is correct a buyer gets screwed for trying to buy a house.
shadash | March 11th, 2009 at 2:43 pmJim,
You didn’t mention the following:
4314 Vista Verde is 345K
4333 Vista Verde is 370K
4318 Wind River is 365K
All of which appear to be short sales. I don’t see a problem other than that she got an above-market offer in a faltering economy. I applaud her; especially with no pictures.
PS.
It’s unbecoming to rant about the problems of your profession. For example, I could rant endlessly about the Federal Governments attempts to keep technology job wages low via H1Bs, but it does no good and frankly would make me look like a whiner. Find the competitive niche and exploit it.
You get paid well to sell houses. Stop sweating the small stuff. Nobody likes a whiner. You will catch more bees with a drop of honey than a gallon of gall. Nothing personal intended.
Chuck Ponzi | March 11th, 2009 at 2:58 pmShadash,
I think there’s still a five-point ding for every inquiry, but I’ve been told that it doesn’t apply any more.
I regularly see a buyer’s agent send over a handful of pre-quals with an REO offer, just out of frustration. If they don’t have one from CHL, their offer doesn’t get reviewed by the asset manager.
The other side of the coin is if you’re the seller, are you going to trust some obscure mortgage broker’s pre-qual letter when you have multiple offers?
If we’re going to nationalize banks, then let’s have one standard way to handle REO sales, and make short sales illegal. That’s what is good for the taxpayer (bank owner).
Jim the Realtor | March 11th, 2009 at 3:05 pmThey have got to do something about the incompetent realtors out there.The state shoud raise the bar on getting a license.You have people out there practicing real estate who have no idea what they are doing.
arizonadude | March 11th, 2009 at 3:06 pmThanks Chuck, I always get my chops busted every time I rant, and as a result, I don’t do it often.
Are you saying because I make a good living I’m supposed to let blatant misrepresentation go without notice? I don’t get the connection.
For the record, everything here is personal to me.
Jim the Realtor | March 11th, 2009 at 3:17 pmP.S. Wind River is the only model-match, and it’s on the stupid range pricing $365-$415,876. The point of the rant is to note how the realtors’ own business practices are having as much to do with the downdraft in pricing, as anything else.
Jim the Realtor | March 11th, 2009 at 3:19 pmshadash,
my FICO was 779 two weeks ago.
All three reports had this among key factors:
Too many inquiries last 12 months
That was the fourth in the last 12 months.
Alex | March 11th, 2009 at 4:06 pmSo it’s true…
Every time you qualify with the bank owned property’s bank to submit an offer you get dinged on your credit report.
Just one more reason to keep waiting…
Sigh…
shadash | March 11th, 2009 at 4:48 pmOn Fico scores:
The Fico algorithms for calculating scores is from what I understand proprietary to FICO (Fair Issac Credit Organizaton) and are not released. Fico does tell us though that their mathematical scoring models are based on (1) payment history on accounts -35%; (2) amounts owed -30%; (3) length of credit history -15% (4) new credit -10% and (5) types of credit in use -10%.
So “dings” from credit inquiries relate to the new credit factor, and the theory goes that if you are constantly applying for new credit, this makes you more of a credit risk. Fico has said that many inquiries over a short period of time count as essentially one inquiry (there is no penalty for shopping several sources for one credit transaction), but that extended inquiries over a long period of time can hurt you.
The fact that too many inquires shows up as a factor does not mean that it has hurt your credit score. The report will always list the factors most negatively affecting your score, even if you have pristine credit.
Kingside | March 11th, 2009 at 4:55 pmThe real estate “game” has become a shark infested, manipulated, 3rd world type of transaction.
The landscape is flat with incompetence, and good honest agents like Jim are sucked into the abyss with very few outlets for seperation.(this blog is a good start)
The channel of business that has the “least of all evils” IMHO are the trustee sales.( for the very experienced only or hiring JTR for assistance).
Yes you contend with the “40″ thieves, you have no title policy, and you have risk of getting sued, but with prices currently 35-60% off retail you have some margin for error. I have paid agents like Jim 3-5% just to help with tracking the good deals and assist with convictions, lock changes, etc , so good agents are also involved in this area of business also. You do not need your own cash,(a popular misconception) as investors will “front” the cash if you are a qualified owner-occupied buyer.
Have you ever considered this niche Jim?
It is not always just a buy side or a hold and rent market. Many investors like to re-list, if they cannot find a pre-arranged qualified buyer.
I really feel for you in this market, but like they say “the cream always rises to the top”.
econman | March 11th, 2009 at 5:26 pmChuck,
Eight out of twelve of the senior software engineers I work with are on H1Bs. Kinda scary. Is there anywhere you can direct me that correlates this with depressed wages? I’m rather curious what’s in it for the government; is it tax money or something else?
Posting this anonymously | March 11th, 2009 at 6:30 pmRant away, it’s your blog
Genius | March 11th, 2009 at 6:31 pmPosting Anon,
Wall St. Journal argued today that H1Bs were actually MORE expensive than US citizen employees. I have to call BS. Does anyone honestly believe corporations are willing to spend extra – *even* if it yields higher quality workers? They obviously haven’t dealt with the pisspoor SW developed offshore that had to be completely redone in order for it to work. Companies will do anything to save a few bucks – or at least try to save a few bucks.
http://online.wsj.com/article/SB123672890680789063.html
I remember some scandal a couple of years ago where it was discovered that large companies were taught how to game the H1B system to gain access to more permits and cheaper labor.
I have friends who recruit for major software companies and they all say the same thing: H1Bs work for less – it has nothing to do with being better educated. That’s the lie they tell you to keep moving along.
HappyRenter | March 11th, 2009 at 7:00 pmI manage a group of software engineers. I’ve done a large amount of hiring over the years and interviewed hundreds of candidates.
We have a standard pay scale at my company, we don’t pay H1Bs any more or any less.
I can’t speak for any other companies out there, but I hire the best candidates I can find, regardless of their citizenship.
Sometimes I think that I *should* pay H1Bs more, they’re the ones who bust their ass. Americans are lazy, which is why engineering programs at universities are filled with foreigners. All of the native-born Americans are studying fluff like English Literature and Philosophy.
greenlander | March 11th, 2009 at 7:20 pmNever seen so many damn engineers on a real estate blog…..LOL
econman | March 11th, 2009 at 7:42 pmI agree with Greenlander, I am a former EE (DOD)and American engineers I hired, wanted to read the newspaper(internet), play video games, BS, etc I even observed an IT engineer looking for dates on an internet service.
Would have loved to get rid of the guy….but it takes an act of congress when you work for the DOD.
Sure wish we could have hired some H1b’s.
I tend to think it has less to do with Americans being too dumb or lazy. My experience has been that the *smarter* Geek-Americans (the protected nerd class) would rather start their own tech company than work the grind in some mid-level coding job. This happens to be my social circle – geeks who refused to take the MSFT, Google, etc. bait and now own their own tech companies.
H1Bs are limited in their options, so they are more willing to take entry level jobs and put in some time before looking at innovating on their own.
In the end, all the talent eventually rises to the top – as it should.
HappyRenter | March 11th, 2009 at 8:43 pm“Americans are lazy, which is why engineering programs at universities are filled with foreigners. All of the native-born Americans are studying fluff like English Literature and Philosophy.”
I’ll take literature and philosophy fluff over engineering fluff any day. Have looked at an engineering curriculum lately? You can replace half the courses at an engineering program with philosophy and might actually come out ahead.
no bubble here | March 11th, 2009 at 10:00 pm“You can replace half the courses at an engineering program with philosophy and might actually come out ahead”
…and when you’re stuck on that proverbial desert island, you can ask the philosophy major to rig up a desalinization device, and build a shelter, and construct a raft, and… Well, you get the drift. In ancient Rome, Engineers were of the Patrician class – the highest in the social order. Do you think Rome’s aquaducts and other marvels of their age were built by philosophers? Philosophers are what society produces after Engineers have solved all the problems of survival and then provided comfort to that society. Engineers are why first Japan, and now China, are kicking our economic a** Or, do you think our lawyers, hair stylists, and others of the much vaunted “service economy” are going to save our bacon?
Bah! Sooner or later everyone buys durable goods. The lawyer buys a computer. The hair stylist buys clippers and scissors. Have you read the labels on anything you’ve purchased in the last 5 or 10 years? Sooner or later, every dime we make in this country gets sent overseas to purchase durable goods. And when they quit buying our worthless Treasury paper, you’d better get ready for a financial crisis that will make this one look like a walk in the park.
The only defense against the U.S. becoming a 3rd world country are the Engineers. Encourage your kids to study math and science! (Because I doubt we’ll pay the freight selling philosophy books).
CB Mark | March 11th, 2009 at 11:12 pmhttp://www.downside.com/bldgjump.gif
Love your blog and humor Jimbo!
Solutions Solutions | March 11th, 2009 at 11:22 pmCBMark, you’ve quoted my post, yet you’re replying to some imaginary person who says we don’t need engineers.
I’ll give a quick example of my point.
http://www.csd.cs.cmu.edu/education/bscs/currsequence.html
There are a required 54 units of Humanities & Arts electives (aka fluff) in their Computer Science program. 15% of the overall degree filled pork, a stimulus package for the university and the teachers, if you will. I’m sure some people are going to say that these courses make a better overall graduate, etc, blah, blah. Some of the posters stated that they hire or work as engineers, maybe they can explain how these courses help their businesses or help them get hired.
I can make the same case for many other courses in that program also.
no bubble here | March 12th, 2009 at 6:17 amThe reason the H&A electives are there is that they are required for a postsecondary educational institution to receive acreditation, and because today’s colleges devote about a third of their undergraduate programs to making up for the inadequacies of primary and secondary education. Even with them in place, most engineers write badly enough to make technical writing a fairly lucrative profession.
GeneK | March 12th, 2009 at 9:42 amno bubble here,
I can only speak for ucla but when I graduated I had taken 20 units of electives (political science/literature in my case) and 160 units of engineering/math/science. Only one of the classes I took in my four years there could be considered “fluff.” I can’t say for certain, but I doubt much has changed in the 11 years since I graduated.
That being said, I have my degree in mechanical engineering but I program video games(thank god I switched), so I’m not sure what the effects of curriculum are on a person’s eventual career.
Acreditation is good and bad. For my brief stint as a professor it made me give half of my class sub b- grades, and most of them deserved a’s.
Genius | March 12th, 2009 at 11:24 amWhen I was in Engineering school, there were almost no girls on the Engineering campus. The only way I met any was by taking electives! So arguably, the electives were good for “rounding out my education” (if not for preserving my sanity).
CB Mark | March 12th, 2009 at 2:59 pmLol, I’ll give you that one CBMark.
no bubble here | March 12th, 2009 at 3:15 pmThey didn’t have bars where you went to college?
Genius | March 12th, 2009 at 8:38 pm